Starbucks to help baristas with bill for online college


A Starbucks drink waits for a customer to pick it up as a barista  prepares another in Seattle. (Ted S. Warren/AP)

Starbucks is teaming up with Arizona State University to offer the coffee chain’s employees a chance to get an online degree for free.

In a press release, the company said Sunday it will pick up half the tab for any ASU four-year online degree. ASU has one of the country’s largest online programs with 40 degrees to choose from.

Employees don’t have to stay at Starbucks after they graduate, but must work 20 hours per week on average at any of the 8,200 company-operated stores (including Teavana, La Boulange, Evolution Fresh and Seattle’s Best Coffee stores) to be eligible for tuition reimbursement. The program isn’t available to employees at Starbucks 4,500 franchise locations.

Hoping to retain its workforce and save on hiring and training costs, Starbucks says it plans to subsidize an online bachelor’s degree program for its employees in the U.S. (Reuters)

 

A year of online classes at ASU costs about $10,000. For employees taking a full course load as freshmen and sophomores, Starbucks and ASU will offer around $6,500 per year, according to the Associated Press.

The company will offer full tuition reimbursement to college juniors and seniors.

ASU President Michael Crow told the Wall Street Journal the program will attract an estimated 15,000 to 20,000 Starbucks employees per year. The school has added 50 teachers, enrollment counselors and academic advisers to meet the demand the Starbucks deal is expected to create.

The cost of tuition for a four-year degree from a public university more than tripled between 1973 and 2013. And outstanding student loan debt has risen to a worrisome $1.2 trillion.

Starbucks is one of many companies offering employees help with college debt, though some ask for something in return, such as a work commitment.

But unlike consulting or banking, making lattes doesn’t demand a college degree. Tuition reimbursement isn’t offered to low-wage workers as often as white-collar workers — though Wal-Mart started offering workers and their families partial tuition grants in 2010. More than 400 employees have since completed degrees at American Public University, a for-profit, online school, according to the Associated Press.

So what’s in it for Starbucks?

The company said it hopes to retain talent by helping employees handle the rising cost of higher education. Starbucks’s turnover rate for employees is very low for the industry — but the industry’s turnover rate is notoriously high. Offering money for school may also help attract better employees – smart, diligent types who show up on time and perform well.

A Center for American Progress study estimates turnover costs employers 16 percent of salaries for employees who earn under $30,000 a year. (Starbucks baristas make $8.80 per hour, or about $18,000 per year for full-time work.) That means it may cost Starbucks about $3,000 to replace a barista. Since food businesses can have more than a 100 percent turnover rate if they replace their entire staff more than once per year, the cost of school could be worth it.

Plus, the company is getting considerable public relations mileage out of the announcement, which will be made jointly Monday by Crow, Starbucks CEO Howard Schultz and U.S. Education Secretary Arne Duncan.

Starbucks’s existing tuition reimbursement program offers full-time employees who have been with the company at least a year up to $1,000 per year for courses at City University of Seattle or Strayer University. A spokesman for the Seattle-based company told the AP Starbucks had paid about $6.5 million so far.

Gail Sullivan covers business for the Morning Mix blog.
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